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Facebook stock slumps another 9 percent

Investors are still giving Facebook stock a thumbs down.

Shares of the social media network, which hit the public markets Friday with a messy stock offering, fell another $3.03 or 9 percent Tuesday to close at $31, 8 percent below the IPO price of $38 and 31 percent below Friday's intra-day high of $45 a share. (Track Facebook’s stock price (FB) here.)

Facebook shares were weakened by doubts over the company's valuation after Reuters reported that Morgan Stanley, the lead underwriter for the company’s IPO, cut revenue forecasts for the social networking site shortly before the company went public.

“When Facebook broke the deal price, it became self-fulfilling that there was going to be additional pressure on the stock,” said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles, adding that there were still those “who think valuation is way too high.”

Related:Underwriter cut Facebook estimates before IPO

Facebook, its investment bankers and the Nasdaq stock market have come under fire for not making sure one of the most anticipated market offerings in recent memory happened smoothly.

When a stock falls below its offer price so soon after an IPO it is considered a disappointment for the company, particularly when the IPO is the most heavily traded ever and concerns such a high profile company.

A number of reasons for the stock decline have been offered by observers. Some pointed to underwriters offering too many shares, while others blamed an overly strong IPO price and worries about slowing revenue growth at the social network.

Nasdaq faces short-term costs from its botched handling of Facebook shares on the first day of trading, but longer-term repercussions could be more expensive as it struggles to restore its image.

Initially, the exchange said it planned to set aside $13 million to resolve bad trades; even if all of that was used, the cost would be minimal compared with the $387 million in net income it reported last year.

Reuters contributed to this report.